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Monthly Archives: December 2014

New Year’s Resolutions

We know that global warming has already killed people.

The second Climate Vulnerability Monitor estimated that natural disasters due to climate warming were already killing 5000 people a year in 2010. The same report argued that another half million deaths per year are due to climate change-induced infections and hunger. The number is expected to rise somewhat by 2030.

World Health Organization offers a more conservative view of the number of health related deaths due to climate change: “Between 2030 and 2050, climate change is expected to cause approximately 250,000 additional deaths per year, from malnutrition, malaria, diarrhea and heat stress.”

These estimates are in the same ballpark – In just 16 years between a quarter and a half million people will be dying every year as a result of infections, health problems and starvation due to greenhouse gas emissions.

We don’t have good estimates of the weather-related deaths that climate change will cause. The world health Organization tells us that the number of weather-related natural disasters reported has more than tripled since the 1960s. Every year, these disasters result in over 60 000 deaths, mainly in developing countries. Only a fraction of these are due to climate change so far, but the number is certain to rise.

I think most Canadians would like to see our country working to prevent further deaths. If we knew that even 5% of the deaths caused by hurricanes in New Orleans and the Philippines could have been prevented by energetic Canadian leadership I think we would have acted. We would be more committed to climate action than we are, say, to bombing ISIS.

Canadian leadership is critical: we may be small emitters compared to the USA but we can make a difference. We can set an example and we can fight on the international scene for treaties that will save lives. This kind of leadership is part of the Canadian tradition.

Maybe our personal New Years resolutions should be about making Canada a lifesaver.


Big 25 Emitters Could Force Reductions

I’ve just read a paper called “Analysing Mechanisms for Meeting Global Emissions Target – A Dynamical Systems Approach.” In it Shyam Ranganathan and Ranjula Bali Swain produce several interesting results.

One is that the data show we will overshoot the 44 gigaton target for 2020 by 27.6%. 44 gigatons is supposed to keep warming below 2 degrees.

Another useful fact is that the top five emitters were responsible for over 50% of greenhouse gas emissions in 2005. The Ranganathan and Swain model suggests China wll be emitting nearly 50% of the world’s greenhouse gasses by 2020.

Following up on this they discover that if the world’s 25 biggest emitters were to cut their emissions they could save the world. The Big 25 would have to cut by a bit more than 27.6% to make up for for 175 countries that didn’t cut, of course, but the key message is that the Big 25 don’t have to wait for the rest of the world.

Ranganathan and Swain don’t include the possibility that the Big 25 could also force reduction on the others through trade sanctions.

What this tells us is that even though meetings like COP20 struggle for any agreement, we don’t need to wait for consensus. Expanding the number of players in agreements like the recent one between the US and China may be the way to go.

Have we been outsmarted?

Cap and Trade is a poor way to control carbon emissions for several reasons. In principle it would be equivalent to a carbon tax if applied to all carbon emitters, but can you really imagine putting a cap on each household and then allowing rich families to buy emission permits from poor families? It might be a nice way to transfer income, but it would be an administrative nightmare.

Cap and trade does seem to work if you only have large emitters that are easy to monitor. Even then it is vulnerable to evasion, and exceptions. It does require effective monitoring, and we in Ontario know that governments will even cut back on monitoring water safety to save money. It is hard to believe that any government can carefully monitor emissions by large corporations year after year while dealing with budget constraints and lobbyists pressing for “self regulation.”

But there is another problem that will soon raise its ugly head. As we move to a carbon tax, what do we do about the companies that have been given the right to emit under Cap and Trade schemes? A company that has been given an emission cap is legally entitled to continue to emit. If it has bought additional credits will it be possible to charge a carbon tax on emissions it has already paid for?

It may turn out that, where Cap and Trade has been tried, it will be a major barrier to effective carbon taxation. There must be a way around this problem, but I don’t see it yet. The public may have to buy back the rights. I am starting to think that we have been outsmarted. It could be that Cap and Trade was a brilliant maneouver to block a carbon tax and to transfer money to the wealthy owners of large emitters.

Suggestions anyone?

Northern Ontario Wins When We Move Away From Fossil Fuels

Did you ever wonder what a significant carbon tax would do to Northern Ontario? It isn’t too complicated. There will be effects on what we sell and on what we buy.

We sell wood. Wood “sequesters” a lot of carbon. A lot of wood will be needed to replace concrete all over the world because concrete production releases huge amounts of carbon dioxide and uses a huge amount of natural gas. We will have a lot of dying trees to get rid of as a result of climate change, so our forestry sector wins big in the long run. If we move into cross-laminated timber (Hey Mr, Gravelle! are you listening?) we do even better, because we are adding value to the wood.

Base metals are another win. It takes a lot of energy to produce Iron or nickel, but these metals go into products that are used again and again. They are actually very energy efficient AND they can be recycled. Furthermore, the technology is already available to produce them without fossil fuels. The transition will take time,but it is coming.

The rare earths will get more valuable. They are needed for all the magnets, motors and electronics, specialized material and batteries that are needed to cut energy consumption. We have rare earths. More jobs.

If we can become major suppliers of energy efficient equipment for the mining industry around the world, we will do even better.

We don’t produce fossil fuels, so we dodge that bullet.

On the cost side, fuels and food will cost more. Ironically, most northerners spend less time commuting than their Toronto counterparts, so the “carbon dividend” may actually more than pay for the increased fuel costs. Northern Ontario also has more rivers per capita and more land for bio-fuels, solar arrays and windmills, so we can shift to heat and power sources that avoid the carbon taxes. Increasing fuel costs for industry will be offset by increasing prices for their products, and they will shift to carbon-free energy over time.

Put it all together and I think Northern Ontario wins when we move away from fossil fuels. Maybe I should say wins more than most regions, because the transitions is going to cut costs and give us new technologies to improve our lives no matter where we live.

Carbon Dividend or Economically Efficient Allocation of Carbon Tax Revenues?

Economists will generally argue that returning all of a carbon tax to the people is a poor idea. A basic principle for mainline economists like me is to equalize marginal benefits. If subsidizing solar or insulating city hall has a bigger social return than giving me a check, then that’s the way to spend the money. Economist and many others are attracted to Economically Efficient Allocation.

The advantages of the Carbon Dividend approach are mainly political. First, It is probably easier to sell a carbon tax if we can explain clearly how we make it revenue neutral. The Carbon Dividend is the simplest formulation to sell.

Second, it also appeals to base instincts in a useful way. For the majority of the population – especially the low income end, it will return more than it costs. That should help make it easy to sell.

Third, once it is in place, it will be very hard to take it away. Specific spending plans can be cut back by an unsympathetic government. The Carbon Dividend is politically robust.

Fourth, and this is very important, we will have to raise the carbon tax again and again. The Dividend will make that MUCH easier. Every time the tax goes up the dividend also rises, undercutting political opposition, possibly even getting people to cheer for a higher tax!

Finally, – and this is an equity argument, not a political argument – The dividend will work like a guaranteed annual income. Like it or not, jobs are getting scarcer and we have to find ways to guarantee income for everyone. If we can’t find ways to share the wealth, as Marx pointed out, capitalism will collapse because it is just so darned productive – it constantly replaces workers with machines that don’t buy anything.

It is true that eventually carbon revenues will fall and we will need another solution. The carbon tax is supposed to work itself out of a job! (That might b e a good reason not to cut other taxes.) But we can worry about falling revenues later. In the meantime we will be solving today’s most serious problem.